Should Congress Allow the Sale of “Used” E-Books?

I have hundreds of books I will never read again, and some I never read in the first place. For the ones printed on traditional paper, I can give them away or sell them. The e-books are another story. They’re “stuck” wherever they’re stored, and if there’s a way to resell them and move them to someone else’s device, it’s probably copyright infringement.

That’s the lesson of the Second Circuit’s opinion in Capitol Records, LLC. v. ReDigi (Opinion available here, PDF). This case is about a company, ReDigi, that allowed purchasers of digital music to resell that music to other purchasers. The company did it by developing a system that transferred the digital music recording from one electronic storage device to another, ultimately erasing the digital recording from the first device. Record companies sued, and the District Court and the Second Circuit agreed with them, concluding that ReDigi had violated the Copyright Act.

In an opinion filed on December 12, 2018, the Second Circuit said: “The fixing of the digital file in the ReDigi server, as well as in the new purchaser’s device, creates a new phonorecord, which is a reproduction,” violating the Copyright Act’s “grant [to] the owner of a copyright the exclusive right to control the reproduction and the distribution of the copyrighted work.” (Opinion at 11-12, 16). The Court further concluded that ReDigi’s reproduction of copyrighted works did not fall into the Fair Use exception to copyright infringement.

Realizing this case has implications for all digital goods, including books, the American Library Association (ALA) filed an amicus brief (“friend-of-the-court brief”) in support of ReDigi (available here, PDF). They argued that ReDigi’s actions fall within the Fair Use exception, saying that “a positive fair use determination in this case would encourage libraries to provide innovative services to their users… such as the Internet Archive’s Open Library (page 5).”

Disagreeing with the ALA, the Association of American Publishers filed an amicus brief in support of the record industry, arguing that a decision “in ReDigi’s favor… would be catastrophic for the entire publishing industry (page 6) (available here, PDF).”

The Court rejected ReDigi’s and the ALA’s arguments and sided with the record and publishing industry. So, that’s the status of the law right now. But what if Congress changes it?

As the Second Circuit says in its opinion:

If ReDigi and its champions have persuasive arguments in support of the change of law they advocate, it is Congress they should persuade. We reject the invitation to substitute our judgment for that of Congress (36).

What I want to discuss — as a purchaser and author of e-books — is whether Congress should amend the Copyright Act to allow the resale of digital materials, including “used” e-books.

The Association of American Publishers’ brief paints a gloomy future for the publishing industry if services like ReDigi’s transfer system ever become legal. While I’d like to say that they’re overreacting, I can’t deny that a secondary market of “used” e-books will have a huge impact on the primary market for these books. As they argue:

  • “Digital copies of eBooks are perfect market substitutes for new eBooks,” unlike used paper books which disintegrate over time.
  • “A secondary ‘lending’ market for eBooks, would [] quickly satisfy consumer demand from a very limited number of authorized copies.” (see the example in A Second Hand Market for Digital Goods?)

Yes, a secondary market of “used” ebooks will reduce the sales of books in the primary market, ultimately reducing the money publishers and authors receive. This troubling scenario is quite different from what publishers and authors faced in Authors Guild v. HathiTrust, 755 F.3d 87 (2d Cir. 2014) and Authors Guild v. Google, 804 F.3d 202 (2d Cir. 2015). In both of these cases, the Authors Guild and its allies lost–and rightly so.

In the HathiTrust case, the Authors Guild and others challenged the use of copyrighted works in a repository that (1) allows users to see search terms in books (but not the whole books), (2) preserves copyrighted works for replacement when a member’s original copy is lost, destroyed, or stolen (and “a replacement copy is unobtainable at a ‘fair’ price elsewhere”), and (3) allows member libraries “to provide patrons with certified print disabilities access to the full text of the copyrighted works.” The repository serves a public good — including the important goal of increasing accessibility to books for people with disabilities — and did not substantially impact the primary market for the books.

Similarly, in Authors Guild v. Google, the Library Project and Google books project, which allow users to search books to find out whether “the book contains a specified word or term” and see “snippets” of the text, did not substantially impact the primary market for the books. If anything, those projects advertise those books, possibly encouraging people to buy them so they can see more than a mere “snippet.”

Unlike Google’s projects and HathiTrust, ReDigi’s system actually creates a secondary market for ebooks that competes directly with the primary market. Why would anyone buy a first-band ebook when they can just as quickly and more cheaply buy a second-hand ebook in pristine condition? The reduction in sales in the primary market could dissuade publishers from offering ebooks.

Would it also discourage authors from writing them? As an indie author, I’ve never expected to make much money from the books I publish. I write these books because it’s a fun experience and a much-needed distraction from my public policy and litigation-focused “day job.” But I realize that it’s a privilege to be able to make art for little pay, and I’m wary of any potential legislative change or future judicial announcement that reduces the income of artists.

10 comments

  1. Oh this is fascinating – I’ve always found it troublesome that we’re somehow renting the e-books and music, that they can’t be passed on. Sure you can give the physical device to someone, but they don’t own it. What gets me is that the e-book prices don’t vary as much as the physical books. I wish there was better regulation like charging more when the books are first released (hardback) and then decreasing it later (paperback). More often than not, I feel like the digital price is just super high or super low and doesn’t have as much diversity which pushes me to buy paperback used versions for 1/3 the cost!

  2. I’ve encountered a few publishers who want to make e-books the same price as the paperback version, which I think is unreasonable. However, I’ve read articles about why e-books shouldn’t be cheaper than paperback because they’re not cheaper to make. I’m not sure about that argument… Anyway, if ebooks are at least half the price of the paperback, I’m fine not being able to sell the book. There is a way to loan your ebook to a friend if you use Barnes & Noble (though I’ve never done this–I just know my tablet prompts me to try it out).

    I Googled the conversation about the cost of print vs. e-books and found this, from Amazon to Hatchett Books: “With an e-book there’s no printing, no overprinting, no need to forecast, no returns, no lost sales due to out-of-stock, no warehousing costs, no transportation costs, and there is no secondary market – e-books cannot be resold as used books,” the company wrote. “E-books can be and should be less expensive.”

    Then, on a different website, I found this: “Many people are confused as to why ebooks cost so much. The short answer is that the majority of the cost of publishing and distributing a book is in the actual editing and layout process. Printing a physical book is just a small portion of the cost that goes into selling a book. Source: I work in publishing.”

    I guess all this is to say that I wouldn’t even consider selling a used ebook if they were inexpensive compared to paperback. I feel the same way about buying a song on Google Music. It costs me a $1.09 in most cases. Why would I try to recoup that?

    1. I agree with Amazon’s take on this issue: “E-books can be and should be less expensive.” Traditional publishing companies are trying to justify their expensive way of doing business, even though the publishing environment around them has been changing for a long time (that’s why the Authors Guild and the publishers are often on the wrong side of litigation, as I’ve written about a few times on this blog).

      I question whether books these days get the type of editing they used to. Does a book published in 2019 receive the type of editing Harper Lee’s To Kill a Mockingbird got (which was EXTENSIVE)? What are we, as consumers, paying for when a traditional publisher insists on charging $14.99 for an ebook? I refuse to buy ebooks at that price (unless I have a very good reason for doing it, such as wanting to support that author).

  3. When I first got published, some fifteen years ago, I dreamed that in time, I would be able to live off income from my writing. Yup, that’s the dream all writers have. Didn’t happen for me though. The most I ever made in one year was around $3K. In the last few years, I’m lucky if I get anywhere near $500. Writing is fun, but the anxiety and stress over publication and sales is a definite negative. It takes all the joy out of creativity when you realize either no one wants your product or they can’t find you in an increasingly crowded profession. Anything that makes it even harder for writers to make a living is really annoying.

    1. Yeah, it’s hard enough for writers to get paid for their work *without* a legal secondary ebook market to compete with. Publishing and marketing are very stressful, and I’m just not going to put more time or money into it. Right now, I’m meeting my expectations, and I’m happy with that.

      I hope 2018 is ending on a high note for you. Happy New Year!

  4. Huh. I’ve never wanted to resell my EBooks. Trad books take up space, so I need to get rid of them periodically. EBooks are out of sight/out of mind. And most of mine were pretty cheap to buy so I’m not looking to sell them anyway.

    1. I feel the same way about my ebooks. They don’t take up much space, and they aren’t particularly expensive. There are a lot of expensive ebooks out there, but I tend to borrow them from the library or skip it in favor of something less expensive.

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